Comprehensive Planning. Lifelong Solutions.

Can I Really Use My IRA to Pay For Long-Term Care Insurance?

By Jennifer Rossettini, CFP®

Many of our readers have two things in common: (1) they are not fans of “traditional” long-term care insurance, and (2) they are not fans of being required to take distributions from their IRA’s when they reach a certain age.  If you find yourself nodding your head and saying, “Me too!,” I have some good news for you.  With the right approach, you can take those Required Minimum Distributions (RMD’s) that you do not need and repurpose them to pay for “non-traditional” or “hybrid” long-term care insurance benefits.

When thinking about long-term care insurance, most people think of what is now considered a “traditional” long-term care policy.  These are the policies that you pay a premium for and if you need coverage it is there, but if you don’t need coverage, you lose the premiums paid.  Traditional policies are much like auto or home-owners’ policies – you pay for them with the hope that nothing terrible happens to your home or car, and you pay for them regardless of the “use it or lose it” nature of them.  Unfortunately, even though the chances of needing long-term care are greater than, knock-on-wood, getting into an accident, very few people choose to insure against this risk.

Why is this the case? Well, for one thing, it is thought to be expensive.  For another, it has the reputation for hefty premium increases.  And, as it turns out, rightfully so.  It was recently reported in The Virginian-Pilot that an estimated tens of thousands of Virginians will soon be hit with a double- or triple-digit percentage increase in premiums.[1]  Insurers have asked the State Corporation Commission to approve these rate hikes, because they have spent over a quarter of a century incorrectly estimating how long people stay in nursing homes and how many people would drop their policies.[2]  “Insurers kept initial premiums low and aggressively marketed policies, expecting many buyers to drop coverage when prices went up.”[3]  However, more people kept the policies than the insurance companies counted on, thereby causing the payout on claims to be much higher than expected.

Alternatives to traditional long-term care insurance come in the form of “hybrid” policies.  These hybrid policies give the policy owner access to the death benefit, or a multiple of the death benefit, if long-term care services are needed.  If long-term care services are not needed, or if not all of the death benefit is used up to pay for long-term care expenditures, the remaining death benefit is paid out to the designated beneficiaries upon the death of the policy owner.[4]

An example of such a hybrid policy is a product offered by State Life/OneAmerica.  It is a Whole Life life insurance policy with a Continuation of Benefits (COB) Rider.  You make a one-time deposit into a life insurance contract with the COB rider and receive a death benefit for your heirs as well as a lifetime long-term care benefit. 

To use an example, let’s assume that a male, aged 70, and a female, aged 71, are looking for a way to leverage a portion of their savings to fund long-term care expenses.  They also do not need their RMD’s to support their lifestyle.  Her IRA, which is valued at $119,000, has an RMD of $7,800.  His IRA will have an expected RMD in the first year of $3,300.  They could roll over her $119,000 IRA into the base policy and use the annual RMD’s from his IRA, net of taxes, to pay for the COB Rider. In exchange, they will receive lifetime long-term care benefits equal to $62,300 per year for each of them or $124,600 for both of them.  They are able to repurpose the $11,000 annual RMD’s that they didn’t need into something that they could very well need in the future.  But, even if they do not use the long-term care insurance, their heirs will receive a death benefit.

If you are interested in exploring this and other types of hybrid long-term care policies, the professionals of the Hook Law Center, P.C. can help you analyze your situation and introduce you to the right partner to meet your needs.


[1] https://pilotonline.com/news/local/health/article_7dc2abde-6832-11e9-b47a-a700b077671c.html

[2] Id.

[3] Id.

[4] Jamie P. Hopkins, Rewirement: Rewiring the Way you Think About Retirement,” p. 69 (2018).

Ask Kit Kat: Elephant Sense of Smell

Hook Law Center: Kit Kat, what can you tell us about elephants and their capacity for smell?

Kit Kat: Well, as you might suspect, elephants have large, long noses in their trunk. So, it’s not much of a stretch to imagine that their capacity for smell would be greater than some smaller creatures in the animal kingdom, including humans. Why this is important to know is that it may have implications for keeping elephants safe from predators when they wander beyond protected areas, tempted by smells that we may not even be aware of.

To test ideas about whether or not elephants possess greater olfactory capabilities than most animals, Dr. Joshua Plotnik of Hunter College in New York City devised some experiments. Six Asian elephants, which were blindfolded, were presented with plastic buckets with varying amounts of sunflower seeds. The buckets had lids, but also had holes, so the waft of odor of the contents could escape. “Remarkably, when we put two different quantities in the buckets, the elephants consistently chose the quantity that had more over less,” according to Dr. Plotnik.  For example, when there were large differences between the amount of seeds in a particular container, say 30 v. 180 seeds, the elephants were very accurate in picking the larger bucket. When the quantity varied slightly, say 150 v. 180, their accuracy slipped to about 50%. This proved Dr. Plotnik’s hypothesis that elephants have a powerful sense of smell which is not dependent on sight.

Why is this experiment important? Elephants in Thailand and Africa have spilled over from their protected areas into humans’ farmlands. Inhabitants love the elephants, but they don’t want their crops destroyed. It’s becoming quite a problem. Perhaps if there is more understanding what is attracting the elephants, better solutions can be devised to keep them in the areas which have been designated for them. It’s all about co-existing without expense to any group. (Veronique Greenwood, “Elephants May Sniff Out Quantities With Their Noses,” The New York Times (Trilobites), June 4, 2019)

Posted on Monday, June 17th, 2019. Filed under Senior Law News.

Maintaining Internal Systems and Strengthening Integrated Networks (MISSION) Act Goes into Effect

By Shannon Laymon-Pecoraro, CELA

Signed into law on June 6, 2018, the MISSION Act is designed to strengthen the ability of the Department of Veteran’s Affairs (VA) to deliver easily accessible high quality care at VA facilities, virtually, and in the community. The MISSION Act went into effect on June 6, 2019.

The MISSION Act came after a study in 2014 that revealed hundreds of thousands of veterans were waiting weeks, sometimes months, for medical appointments at VA health facilities, with some veterans dying while they waited for an appointment.

The law requires the VA to establish new quality and access standards for care received outside VA facilities. While the MISSION Act will better integrate the VA with community health care providers and tackle issues associated with the VA’s outside care program, ultimately expanding health care options, the MISSION Act is also designed to maintain the VA’s infrastructure for those who receive care at VA facilities. To do so, the MISSION Act requires the VA to review its medical centers and clinics to determine whether they are properly structured to serve the veteran population, and put assets and resources into locations that will benefit veterans most.

A key component of the MISSION Act was to provide urgent care benefits to Veterans while promoting choice and access to timely, high-quality care. Rather than being required to go to a VA facility emergency room for urgent care issues, the MISSION Act allows veterans to go to civilian urgent care facilities. To receive care, and have the VA cover the cost, the following conditions exist:

  • The care provider must be part of the VA’s contracted network of community healthcare providers
  • Must be for urgent care –  preventative care or dental services will not be covered
  • You must be enrolled in VA healthcare and have received care through the VA within 24 months
  • You may be charged a copayment, of  up to $30,  for your urgent care visit which will be billed by the VA, not the care provider
  • A prescription for more than a 14-day supply must be filled by the VA and there may be copays for prescriptions filled outside of the VA

There are additional benefits under the MISSION Act, such as access to the caregiver program for veterans who have incurred or aggravated serious injuries while serving in the activity duty military. Additionally, the VA must provide access to community care if the VA does not offer the services required by the veteran, there is not a full-service medical facility in the state in which the veteran resides, or the veteran was eligible for care in the community under the 40-mile rule in the Veterans Choice Program. There is also a responsibility for the VA to ensure its care providers are using “evidence-based guidelines” for prescribing opioid-based painkillers.

Ask Kit Kat: Feeding Hummingbirds

Hook Law Center: Kit Kat, what is appropriate to feed hummingbirds?

Kit Kat: Well, first of all, there are many types of hummingbirds. Bee hummingbirds are extremely tiny. They are the tiniest of hummingbirds. Rufous hummingbirds make very long migrations relative to other migratory birds. Anna’s hummingbirds fly faster than some space shuttles. So all in all, this is a very varied species.

With that said, if you happen to live in an area with hummingbirds, how can you encourage them to stay, and what should you offer to feed them? Experts say the best thing to provide hummingbirds is an environment rich with insects and flowers. Salvias, penstemons, monkeyflowers are excellent examples. In the past, it was thought that feeders containing sugar water was the way to go. However, scientists now realize that is probably the worst thing that can be done. One has said, “Feeders in landscapes with fewer insects are akin to fast-food drive-thrus doling out 32-ounce sodas and nothing else—a quick hit of energy but little substance.” Moreover, sugar water can go flat, especially in hot weather. If used, it should be changed often. Lisa Tell, of the UC Davis Hummingbird Health and Conservation Program, comments, “If you wouldn’t drink it, then it’s not great to offer them.” Also, feeders should not be placed too close to a window to prevent the birds from injuring themselves.

Hummingbirds are an important part of our ecosystem. They help to pollinate about 7,000 species from Alaska to Argentina. In turn, the plants they help to thrive, provide nourishment for mammals that we humans consume. It’s the circle of life—and we owe these tiny avians a great deal! (Nancy Lawson, “To feed or not to feed,” All Animals, March/April/May 2019, p. 30)

Posted on Thursday, June 6th, 2019. Filed under Senior Law News.

How to Provide for Your Pets After You’re Gone

By Emily Martin, Esq.

For many Americans, owning a pet – whether it’s a dog, cat, bird, or other type of animal – is a major part of a fulfilled and happy life. In fact, sixty-eight percent of U.S. households, or about 85 million families, own a pet, according to the 2017-2018 National Pet Owners Survey conducted by the American Pet Products Association (APPA). Pets can provide companionship and often protection for someone who is elderly or living alone. Unfortunately, however, pets can’t take care of themselves after you are gone. So what can be done to provide for your pets if you pass away before they do?

There are a variety of ways in which people make arrangements for their pets after they pass away. Some people may have a discussion with friends or family members who have agreed to take on their pets upon their passing. Still others may have made arrangements for a shelter or other organization to care for their pets when they are no longer able to. Additionally, some people take the step of providing for their pets through their estate plan.

A controversial story was recently reported out of Chesterfield, Virginia, where an owner specified in her estate plan that she wished for her dog to be euthanized and laid to rest with her upon her passing. Although the dog was perfectly healthy and had been in the care of an animal shelter, it was euthanized and taken to a pet cremation center upon the death of its owner (source: https://www.cnn.com/2019/05/22/us/dog-buried-with-owner-trnd/index.html). The animal shelter was unable to keep the dog despite the fact that they felt confident that they would be able to find a new owner for it.

Disturbing stories like this are rare, but it may be that the owner of the dog in Chesterfield did not feel that anyone would be able to care for her dog after she passed away. Perhaps she felt that euthanizing the dog immediately was more humane than having it sent to a shelter where it may be euthanized anyway. Regardless of the reasoning for this plan, there are many ways to avoid uncertainty as to what will happen to your pets after you pass away.

While you can’t leave property directly to a pet, Virginia Code Section 64.2 726 allows you to provide for your pets in your will or trust by creating a “pet trust.” Pet trusts allow you to leave a certain amount of money to someone who will care for your pets until the pets pass away.

For example, you may leave $10,000 to your granddaughter for the care of your dog Rusty. Additionally, if you have multiple pets, you can leave an amount to be used for all of your pets (or the pets you own upon your passing) until they pass away. It is possible to create multiple pet trusts for different pets – say, if you want your sister to have your cat, but you want your niece to have your dog. It is important to name an alternative caretaker as well who can continue to care for your pets, if the original person you named is unable or unwilling to care for the pets.

Perhaps the most important thing to do when deciding how to provide for your pets is to have a conversation with the person to whom you will be entrusting their care. Make sure the people you are naming in your pet trust are aware that they will be caring for your pets after you pass away and that they are willing and able to do so.

Although it is difficult to imagine that our pets may someday be living in a world without us, one of the best gifts we can give them is to make sure that they are provided for once we are gone.

Ask Kit Kat: Spayathon™

Hook Law Center: Kit Kat, what can you tell us about the Spayathon™ which the HSUS organized for Puerto Rico recently?

Kit Kat: Well, this was quite an effort! The Humane Society of the United States (HSUS) organized a spayathon in Puerto Rico, utilizing help from more than two dozen organizations. So far, nearly 25,000 animals have been sterilized and vaccinated since the project began last summer. By the time the effort finishes this month (May 2019), they hope to have helped 30,000 animals. To make this happen, teams of veterinarians, vet technicians, and volunteers were organized to treat the pets in sports arenas and other large venues on the island. In addition to spaying/neutering, pets were vaccinated and received pet food, leashes, toys, etc.—all at no cost to the owner. The impact will be tremendous. According to the ASPCA, “Sterilizing 30,000 cats and dogs will prevent the births of approximately 200,000 puppies and kittens in the first year alone.”

One might think it would not be possible to maintain a high level of quality in volume procedures such as this, but that is not the case. According to Tara Loller, HSUS senior director of strategic campaigns and the creator of Spayathon, “This is the first time high-quality, high-volume spay/neuter of this magnitude has ever been done anywhere in the world.” By following strict procedures for safety and cleanliness, the Spayathon had a tremendous success rate with a low-level of complications. Quality was never sacrificed for quantity. An added benefit was that local veterinarians received training in the latest veterinary care techniques.

There were many heart-warming stories to emerge from the effort. Mary Ann Lopez rescued 5 community cats and had them spayed/neutered. She was given a free play tower. Luis Rosario’s Milagros, a female dog, had been found on the streets, and had obviously recently birthed a litter of puppies. She was spayed at the event. Now she has a home and plenty of food. Her name “Milagros” means miracles in Spanish, and she indeed receive a miracle. There are so many other stories, but there is not room to share all of them here. However, we can thank the HSUS for organizing this fantastic effort! It has helped so many animals who cannot voice their thanks. (Emily Smith, “All In,” All Animals, March/April/May 2019, p. 19-21)

Posted on Thursday, May 30th, 2019. Filed under Senior Law News.

The End of the Stretch IRA?

By Letha Sgritta McDowell, CELA

Tax deferral has long been one of the most powerful money saving strategies in existence and few options rival the concept of the stretch IRA. To understand the stretch IRA, we must first understand why the IRA (or any other tax-deferred savings vehicle such as a 401(k), 403(b), SIMPLE, etc) is such a powerful money saving tool.  If an individual invests $5,000 each year in an IRA beginning at age 29 and retires and stops contributing to the plan at age 65, then their IRA balance would be approximately $796,687 at retirement age. This assumes an average rate of investment return of 7% (the S&P 500 averaged 10.3% between the years 1970 and 2016). Keep in mind the contributions aren’t taxable and neither are the earnings. Current income tax rules require that minimum distributions be taken from the account beginning at age 70 ½ in order to ensure some income tax is paid on that which has not yet been taxed. If the account owner dies and there are funds left in the account and they have named a beneficiary, then the beneficiary may “roll” the account into her or her own IRA, and then he or she must also take distributions from the account. However, the distributions must be taken over the life expectancy of that beneficiary. In many cases, the named beneficiary is younger than the original account owner thereby requiring a smaller percentage be taken annually. In the interim, the inherited account will continue to grow free of income tax. This phenomenon is commonly called the stretch IRA.

Using the above example, assuming a withdrawal rate of just the minimum required distribution of the original IRA owner beginning at age 70 ½ with the same continued rate of return, that same IRA is worth $1,462,161 if the owner dies at the age of 85; the increase being due to tax deferred growth. Then, assume the named beneficiary of the IRA is 55, and he or she rolls the IRA into his or her own IRA and begins taking only the required minimum distributions. Assuming the same 7% growth rate assumed with the initial IRA, the funds will last until the beneficiary turns 84, at which time the IRA value and required minimum distribution is the same amount. That amount being $236,569.

The above illustrates how a total investment of $180,000, when allowed to grow tax free, results in a large accumulation of wealth. In the above example, the IRA pays out a total of $6,999,418 between the original IRA owner and the beneficiary. For years attorneys, accountants, and financial advisors have stressed the power of this savings to clients and their families. And, for added protection, attorneys have strived to ensure that such accounts left to trusts for the benefit of family members also received the same tax deferred treatment. Much billable time and attention has been paid to preserve this tax-deferred transfer of wealth.

Currently, there are bills pending in both the House of Representatives and the Senate which would severely reduce or eliminate the stretch IRA. House Resolution 1994 (also known as the SECURE Act) proposes to raise the age for requiring minimum distributions to 72 but eliminates the stretch provisions which allow a beneficiary to take required minimum distributions over his or her life expectancy. Instead, the new law proposes to require a beneficiary to withdraw inherited funds over a period of 10 years or less. The bill does include some exceptions such as for a spouse, minor child, a child with a disability, or a beneficiary who is chronically ill. The equivalent bill in the Senate is Senate bill 3471. The Senate version proposes to require distributions from an inherited tax deferred account be made over a period of 5 years (instead of lifetime) but is only applicable if the total of all such tax deferred accounts exceeds $450,000. The Senate bill also provides for exceptions for the spouse, minor child, a child with a disability or person who is chronically ill.

These new bills requiring inherited funds be withdrawn and taxed will significantly reduce the amount allowed to accumulate and will reduce the ultimate pay out of the savings. While there are differences in each bill which would need to be rectified before it could pass and be signed into law, these bills have bi-partisan support which is rare and there may be a push to pass the bill in order to show constituents that Congress can accomplish something. Certainly this possible change will likely have a large impact on beneficiaries both from an income tax perspective and from a financial planning standpoint. Should some version of these bills pass, many will need to revisit both their estate and financial plans. Hook Law Center will be sure to monitor this legislation to inform clients of any final change.

Ask Kit Kat: Oyster Castles

Hook Law Center: Kit Kat, what can you tell us about oyster colonies in the Elizabeth River which runs through Norfolk, Virginia?

Kit Kat: Well, this is thoroughly fascinating! Scientists have long planted square concrete blocks with irregular heights and hollow centers in local waters to serve as a base for baby oysters to attach to and grow to form a reef. However, now environmental scientists think they have improved on the concept. Their new concrete blocks still have the same outer dimensions, but they have filled in the square with towers and mounds, so that the new blocks resemble something like a Disneyland castle. Evelyn Tickle, the head of GROW Oyster Reefs, says oysters in these new blocks can grow and “arch over … to establish their own reef. It establishes a natural-looking reef.” Reefs are important because they can serve as a buffer to protect shorelines during storms. GROW Oyster Reefs is based in Charlottesville, VA, but RISE, a Norfolk non-profit, awarded them a $285,000 grant to conduct the trial.

The concept of this new type of block is based on study of actual reefs—how different shapes work to encourage growth. Over the years, various materials have been tried—reg. concrete building blocks and even coal ash. Tickle’s blocks, however, are made of a specialized concrete that imitates the actual composition of an oyster shell. Her hope is that the new baby oysters will actually receive nourishment from the blocks which will, in turn, foster growth. Tickle also says, with her system, blocks will not need to be re-planted every year. Hopefully, her blocks will spur new growth on their own. Tickle hopes to open an office in the Hampton Roads in the near future. She is that confident of her product.

There are  3 locations in the area that have been planted with the new concrete blocks—along the Elizabeth River south of I-264, one in the Lynnhaven River, and one each on the ocean and bay sides of the Eastern Shore. This was done in mid-May of this year. Joe Rieger, deputy director of restoration for the Elizabeth River Project, said these locations will be checked in a couple of months to determine progress. Time will tell how successful this endeavor has been.

(Katherine Hafner, “Unique tile gives oysters a new castle,” The Virginian Pilot, May 20, 2019, p. 1 & 10)

Posted on Thursday, May 23rd, 2019. Filed under Senior Law News.

What You Need to Know About IRS Form 8379 – Injured Spouse Allocation

By Amanda L. Richter, CPA

Internal Revenue Service (“IRS”) Form 8379 Injured Spouse Allocation is a form that can be submitted with the jointly filed individual tax return when it is anticipated that the refund will be used to offset past-due obligations of the other spouse. By filing this form, the injured spouse (non- debtor spouse) is requesting the IRS to not have his/her share of the refund applied to the other spouse’s debt obligation.

When married couples file a joint individual tax return, under the principle law of joint and several liability, both the taxpayer and spouse are held responsible for the tax liability and certain debts. Some examples of debts susceptible to being seized by the IRS are:

  • Federal income taxes
  • State income taxes
  • Unpaid child support
  • Delinquent student loan debt
  • Unpaid spousal support
  • State unemployment compensation

This form can be filed with the tax return or filed separately. If Form 8379 is filed separately, it is important to remember to attach a copy of all Forms W-2 and 1099’s that report Federal withholding. If not attached this can result in delays for the IRS to process the form.

The due date for filing Form 8379 is three years from the due date of the original tax return (April 15th) or two years from the date the tax refund was applied to the debt obligation. This form must also be filed each year the non-debtor spouse is requesting relief.

If you have any questions regarding this information or belief that you may be entitled to an injured spouse allocation, please contact our office at 757-399-7506 to further discuss your situation.

Ask Kit Kat: Forward Food Team

Hook Law Center: Kit Kat, what is the Forward Food Team, and how does it help animals?

Kit Kat: Well, the Forward Food Team is a project of the Humane Society of the United States (HSUS). It fosters training in preparing food which is meatless, yet tasty. A prime example is its partnership with the U.S. Military. A sweet potato and black bean burrito recipe created by the HSUS has been approved by the Department of Defense (DOD) to be served on military bases. This is a huge achievement for HSUS, because DOD has some very strict nutrition regulations. HSUS also has developed recipes for lasagna and tacos using a plant-based meat substitute. Soldiers are apparently enjoying the food. 90% have reacted positively to the menu changes. Stefanie Heath, a HSUS food and nutrition specialist, says, “As long as it tastes good, they’ll eat it.” In addition, military chefs are being trained in plant-based nutrition on several bases and at Fort Lee, an Army base in Virginia, which is an important culinary training center. Gradually, there will be more and more plant-based options on the menu.

HSUS’ Food Forward also partners with universities, K-12 school districts, hospitals, and other groups to include plant-based menu options. In all, 2000 chefs have been trained nationwide. That translates into 10.3 million animal lives saved. Kudos to HSUS to all the institutions who are willing to experiment with their menu options to provide tasty food which is at the same time animal-friendly. (Kelly L. Williams, “Meatless in the mess hall,” All Animals, March/April/May 2019, p. 11)

Posted on Thursday, May 16th, 2019. Filed under Senior Law News.

Deciding When to Take Social Security Benefits

By Jennifer Rossettini, CFP®

In a previous newsletter article, I mentioned that choosing the right Social Security claiming strategy could increase your retirement income by as much as 9%.  This article will discuss the simpler concept of just choosing when to start taking Social Security benefits.  The more complicated claiming strategies will be saved for a future article.

Most Americans know that they can begin taking Social Security benefits as early as age 62, however, nearly 40% of Social Security beneficiaries do not realize that if they claim benefits before their full retirement age, they will receive a permanent reduction in benefits.  Some beneficiaries believe that, if they take their benefit early at 62, the benefit will increase at full retirement age. This is not the case.

The first thing to know when making your decision is what your full retirement age is.  If you were born after 1960, your full retirement age is 67.  If you were born before 1960, you can find your full retirement age below:

The next thing you need to know is how much you lose by claiming benefits early and how much you gain by waiting until sometime after your full retirement age.  The reduction in benefit amount is equal to five-ninths of 1% for each of the 36 months immediately preceding your full retirement age, plus an additional five-twelfths of 1% for each month before that. The increase in benefit amount if you wait to claim benefits until after your full retirement age is two-thirds of 1% for each month you delay, up until age 70 when the benefit amount reaches its maximum.

While waiting to take benefits may seem like a no-brainer, you will also have to consider the fact that you will be missing years’ worth of benefits and calculate your “break-even point” – the age at which the sum of your higher benefits adds up to the amount you missed out on by claiming late.  If you expect to live after your break-even age, then you will be wise to delay taking benefits until your full retirement age as long as it is financially feasible for you to wait.

The following chart shows the reduction or increase in benefits compared with a full retirement age of 67, based on the age at which you claim benefits. It also shows the number of years you would need to receive benefits to break even, compared with claiming at age 62. It is based on the average monthly benefit of $1,404 at full retirement age.[1]

You can visit www.ssa.gov/myaccount/ to find out what your projected retirement benefits will be at your full retirement age, age 62 and age 70.  Based on your expected benefit at full retirement age, you can use the formulas described above to determine what your benefits will look like in the year you choose to claim benefits, and you can also calculate your break-even point.

Of course, determining when to begin taking Social Security benefits is just one piece of a very large and complex puzzle.  Every person has a unique situation affecting their retirement decisions, so general guidelines are meant to be just that – general.  We recommend that you consult with an advisor who can take a holistic look at your goals and resources to determine a retirement strategy and the Social Security claiming strategy that is right for you.


[1] https://www.fool.com/investing/2018/01/16/the-1-chart-you-need-to-decide-when-to-take-social.aspx

Ask Kit Kat: Pet Allergies

Hook Law Center: Kit Kat, what is the best way to handle pet allergies?

Kat Kat: Well, I suppose the simplest way is to not adopt a pet in the first place, if you know you have pet allergies. However, many people are not satisfied with that response, so they go ahead and deal with the allergy, rather than denying themselves the pleasure of a pet. Fortunately, there are degrees of being allergic to pets, so some with mild allergies can, with some precautions and medications, make it work. However, those with severe allergies should not probably not take the risk. If pet fur sends you into an asthma attack and to the emergency room, then perhaps you can satisfy your desire to interact with pets through volunteering in fundraisers for pets or by becoming a member of groups such as the US Humane Society or the ASPCA.

If you have decided to have a pet despite an allergy, Kenneth Mendez, chief executive of the nonprofit Asthma and Allergy Foundation of America (AAFA), recommends keeping “pets out of the bedroom, avoid carpets in the home, and use products certified as asthma and allergy friendly.” Olivia Lanes of Pittsburgh, PA is one such person who plunged ahead with pet ownership despite her allergy. She has 2 cats—Cupcake and Sophie, as well as a dog named Nova. She sneezes a lot and often has congestion, but she wouldn’t give up her pets for anything. Tracy Spiering has a 20-year old cat named Oatmeal Cookie, and 2 other cats. She requires bi-monthly shots to keep her allergies in check, but to her, giving her cats away is not an option. “It would be like giving away your kid.”

Even though some pets cause fewer allergic reactions than others, Mr. Mendez of the AAFA says there’s no such thing as a 100 % hypoallergenic animal. Another suggestion by an American Kennel Club spokesperson is to try out a pet by interacting with the specific pet for a few times to see if they cause an allergic reaction. Ashok Wahi of Basking Ridge, NJ has developed a non-prescription gel called NasalGuard which sells for $14.85. It can be applied to the nasal passages, and helps reduce allergic reactions. He should know. He developed it for his daughter, so she could keep her cat Ebony.

In summary, the decision to proceed with pet ownership despite an allergy is an individual one. Don’t feel guilty if you decide it just won’t work for you. There are other ways to support animal welfare. (Khadeeja Saafdar, “My Cat Allergy Is Killing Me, but Cupcake Stays,” The Wall Street Journal, March 28, 2019)

Posted on Monday, May 13th, 2019. Filed under Senior Law News.

HUD Releases ABLE Account Guidance

By Shannon Laymon-Pecoraro, CELA

In December 2014, the Achieving Better Life Experience Act (ABLE) was signed into law, allowing persons with a disability onset prior to age 26 to establish tax-advantaged savings accounts. ABLE was designed to promote the health, independence, and quality of life of individuals with disabilities by allowing families to fund an account in which such an individual can secure funding for disability-related expenses. Similar to a special needs trust, the individual with the disability will have a beneficial interest, and the purpose is to supplement and not supplant other benefits. A qualified disability expense is defined as “any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary, including the following expenses: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses, which are approved by the Secretary .” While the treatment of ABLE accounts for the Social Security and Medicaid programs was established with the promulgation of ABLE, other means-tested benefits programs needed to clarify how they would treat ABLE accounts.

Many people with disabilities rely on assistance received through the U.S. Department of Housing and Urban Development (HUD) for housing. This assistance is most frequently received through public housing or rental assistance programs. As a general rule, eligibility is based on annual gross income, with established income limits based on area and family size. The individual receiving housing assistance will be responsible for rent, which is set at the highest of 30% of the monthly adjusted income, 10% of monthly gross income, welfare rent, or a $25-$50 minimum rent set by HUD. In calculating a household’s income, HUD will impute income to assets at the higher of actual income or calculate income from the asset based on the passbook savings rate, which is currently .06%.

HUD recently released guidance for the treatment of ABLE accounts for HUD assistance programs, clarifying that HUD will disregard amounts held in an ABLE accounts. In doing so, HUD states that under ABLE legislation, the account balance is specifically disregarded when determining an individual’s eligibility for federal means-tested programs, and that ABLE exclusion applies to HUD programs in determining a family’s income. As a result, the balance of an ABLE account will be excluded in the household’s assets, and there will be no actual or imputed income to such an account. Further, distributions from the ABLE account will not be treated as income. This favorable treatment is, however, not without limitations since HUD will continue to treat all wage income received as income, regardless of whether the income is paid into an ABLE account.

Ask Kit Kat: Tail-Tied Squirrels

Hook Law Center: Kit Kat, what can you tell us about the baby squirrels who got their tails tied together when they were in their nest?

Kit Kat: Well, this is almost unbelievable, but it really did happen. The squirrels in question were 5 baby Eastern gray squirrels. Their nest or drey was inside a tree in Milwaukee, Wisconsin. In the confined space of the nest, and with the fine hair of the babies’ tails coupled with the grasses the mother squirrel had used to line the nest, the babies’ tails became a gnarled mess. Someone rescued them and brought them into the Wisconsin Humane Society. Scott Diehl, Wildlife Director, was charged with untangling them. They resembled a star with 5 points that were pulling in all different directions. They were quite agitated, as one might expect. They had to be sedated using a tiny amount of ketamine and xylazine. Once that was done, he placed them on a heating pad. Then he set to the task of untangling them using a tiny, sharp-pointed scissors. In about 20 minutes, he got the job done. He said, “It was like untangling a ball of Christmas lights.” Because the tips of the tails had been deprived of circulation, 3 of the little ones lost a portion of their tails.

In another state (Nebraska), a similar situation played out. This time there were 6 tangled baby squirrels. Laura Stastny, Executive Director of Nebraska Wildlife Rehab, worked by herself. It was night, and she could not locate a veterinarian to do the sedation, so she wrapped them in a towel to keep movement to a minimum. She said, “I had them wrapped like a squirrel burrito.” It took her 90 minutes. 5 of the 6 squirrels ended up losing part of their tails, too. But, that’s not really a problem—tails are not essential.

Somehow, both stories got publicity through the Associated Press, and news of their feats even reached Europe! The important thing is that the tiny babies were relieved of their suffering. As Scott Diehl said, “For us, it all goes back to our mission. The mission of the Wisconsin Humane Society is to build a community that values animals and treats them with respect and kindness.” (John Kelly, “What do you do when five baby squirrels accidentally tie their tails together?” The Washington Post (Local Perspective), April 17, 2019)

Posted on Monday, May 6th, 2019. Filed under Senior Law News.

How to Cope with the Early Stages of Dementia

By Emily Martin, Esq.

When a parent or loved one is diagnosed with dementia, the diagnosis is devastating not only for the person who has dementia, but also for their friends and family. Because many types of dementia are degenerative, meaning they will continue to worsen with time, a dementia diagnosis often changes the landscape of family relationships. While Dad may have always handled the finances, if he is diagnosed with Alzheimer’s disease and Mom is unable to learn how to manage their money, a child or other caregiver may need to step in and begin handling these things for them. Or if Mom has always loved to drive to her monthly hairdresser appointments and weekly grocery store trips but suddenly finds herself getting lost on the two-mile drive there, it may be time for her to stop driving. How can you tell whether a loved one is suffering from dementia in the first place, and what can you do to help someone who is suffering from the early stages of this disease?

If you suspect that your loved one may suffer from dementia, the first step is to take them to the doctor to get that diagnosis confirmed. The doctor can help develop a treatment plan based on your loved one’s specific medical diagnosis, and having a specifically tailored plan can often slow the progression of the disease. This diagnosis, although difficult to hear, may also help your loved one realize that they need help (at least in the beginning stages of the disease). Although Mom may seem perfectly capable of handling her finances, research has shown that the judgment needed to make financial decisions is impaired even during the early stages of dementia. Even if Mom looks and feels fine and is acting relatively normal, her state of impaired judgment may not allow her to see that something is a scam. Something that she would have easily recognized as a rip-off before her diagnosis may now seem like a good idea to her. Armed with the knowledge of her diagnosis, Mom and her family members will be better equipped to handle these types of situations.

Not only can this impaired judgment make someone vulnerable to abuse from outside parties, but it can also make it easier for unscrupulous family members to prey upon those with dementia. If Dad needs help writing checks and a dishonest family member offers to “take care” of everything for him, Dad might agree to that in a moment of weakness. The same is true of personal decisions, such as whether to move into a nursing home or with another family member. Often these types of situations result in an abuse of power and financial exploitation or elder abuse by family members. Although it is illegal, cases of financial exploitation can be extremely difficult to prosecute. In fact, thousands of cases of financial exploitation of seniors each year go unreported or are not investigated. For these reasons, it is important to make sure that your parent has a strong estate plan in place that is designed to prevent issues from arising when he/she no longer has the capacity to make his/her own decisions.

It is vital that this step be taken as soon as possible – if you wait until your loved one no longer has the capacity to sign legal documents, it may become necessary for a judge to appoint a guardian and conservator to make those decisions for them. When someone does not have a power of attorney, anyone can petition a judge to be appointed conservator for them, so they can manage their finances. In contrast, a financial power of attorney allows you to decide who will make financial decisions for you, and it can also set the stage for Medicaid planning in the future if that becomes necessary. An experienced elder law attorney will draft a financial power of attorney that will give your agent the authority to rearrange your assets and manage them in a way that will allow you to qualify for Medicaid in the future if you need that benefit to cover the cost of long-term care.

Additionally, if someone does not have a healthcare power of attorney, anyone can petition a judge to become guardian over that person, so they can make their personal decisions for them. These decisions include whether they should live in a nursing home, what their course of medical treatment should be, and much more. Not only is this an expensive and public process, but the person the judge appoints  may not have been the same person that your loved one would have wanted managing his affairs, if he/she had been able to make that decision on his/her own. In contrast, an advance medical directive often includes a living will as well as a healthcare power of attorney. A living will allows you to state your wishes for end-of-life care. If you were in a terminal state with no hope of recovery, would you want to be kept alive artificially through a ventilator, respirator, or feeding tube? This document helps make your wishes clear to your doctors as well as your loved ones.

If a loved one has recently been diagnosed with dementia, it is important that they consult an experienced elder law attorney as soon as possible in order to get their affairs in order. Most people in the early stages of dementia have the capacity to sign legal documents, but that can change very quickly as the disease progresses. Do not wait until it is too late to have these important discussions with your loved ones.

Ask Kit Kat: Brave Canine

Hook Law Center: Kit Kat, what can you tell us about the dog in Thailand who ended up seeking refuge on an oil rig that is 135 miles from shore?

Kit Kat: Well, this truly is a remarkable story! Somehow a brown dog, resembling a hound to me, but which was identified as an aspin, a breed from the Philippines, ended up near an oil rig, which was 135 miles from the nearest shore off the southern coast of Thailand. No one is sure how he got there. He may have fallen off a ship; nonetheless, he made his way to an oil rig in the middle of the ocean. Fortunately, he was spotted by one of the workers, Vitisak Payalaw, because the water was extremely rough. At first, Payalaw tried extending a pole, but that really doesn’t work for a dog with only front paws to grip it. So, with the assistance of 3 others, a rope loop was devised after some discussion about what was the best way to proceed. The crew was ecstatic when the device worked. Payalaw said, “His eyes were so sad. He just kept looking up just like  he wanted to say, ‘Please help me.’ At that moment, whoever saw this, they would just have to help.” Once rescued, they fed him some water and meat. They also named him “Boonrod,” which means “he has done good karma and that helps him survive.”

On April 15, 2019, Boonrod was transported back to the mainland (Songkhla, Thailand) where he was examined by a veterinarian. He appears to be in good condition. He will stay in Thailand a while to regain his strength. Payalaw has volunteered to adopt him, if he is not claimed by anyone in the near future. This is one lucky dog, who never gave up trying! His story could have ended tragically, but perhaps he does have good karma and deserves to have a few more days on this earth. (Kyle Swenson, “ ‘His eyes were so sad’: Oil rig crew rescues a dog swimming 135 miles off Thailand,” The Washington Post, Morning Mix section, April 17, 2019)

Posted on Monday, April 29th, 2019. Filed under Senior Law News.

Fraud, Scams, & Dementia

By Letha Sgritta McDowell, CELA

A recent study from Rush University analyzed whether decreased awareness to scams was an early indicator of dementia.  The study included more than 900 seniors in their 70s and 80s and their ability to detect scams and fraud. Researchers then examined whether there was a link between susceptibility/awareness of scams and fraud to Alzheimer’s disease or other cognitive impairment. The seniors studied had no obvious signs of dementia or impairment at the outset.  Of those studied, more than 400 later were diagnosed with Alzheimer’s disease or cognitive impairment.

Science has determined that before symptoms of cognitive impairment become obvious, there are changes to the brain which seem to impact executive function.  Many have wondered if an impaired executive function (judgment and reasoning) leave a person open to scams and fraud, especially with the prevalence of Elder Abuse.  The study from Rush University appears to be the first to study a link between the two. Participants in the study who were later diagnosed with Alzheimer’s disease or cognitive impairment demonstrated a higher likelihood of being susceptible to scams or fraud prior to the diagnosis.

It is important to note that the study is not conclusive, and some people who were not diagnosed with dementia were unable to detect scams, and some with cognitive impairment were not victims.  Instead, the study demonstrated an increased possibility that someone unable to detect fraud or a scam may have an increased likelihood of later being diagnosed with a cognitive impairment. The study is both good and bad. Elder abuse is underreported in many cases due to concern by the older adult that he or she will be perceived as being impaired. However, many caregivers want to protect their older adult loved ones and want to prevent them from being victimized. Also, getting an early diagnosis and care for changing cognition may be beneficial in the long term with regard to the elder’s later functioning.

If you are concerned about being the victim of a scam or are concerned about a loved one falling victim, there are some resources available to assist. The Financial Industry Regulatory Authority (“FINRA”) has created a risk meter for individuals to determine their risk factors for investment fraud.  The questions range from whether you live alone to have you considered buying stocks in tech or start-up companies or which sell for less than $5 a share to have you attended an investment seminar with a free meal? Answers to these questions lead to a score on a scale from low to high along with a description of what makes an individual more likely to fall victim to scams.  Interestingly, age is not a factor on FINRA’s risk meter, but whether you live alone is something to be considered.

FINRA has also created a test to determine if you’ve been scammed and asks questions about where you learned about the activity and what sort of guarantees were provided. The results of the “scam meter” show red flags warning of scams and why they are red flags. In addition, FINRA provides additional resources about avoiding fraud and a hotline to help answer questions about investments and investment opportunities and to file complaints if they have been victimized.

Again, a lower than average ability to detect a scam or fraud is not a guarantee of a later diagnosis of dementia.  Instead, it can be an early warning sign which allows the individual and their loved ones to be vigilant and prepared.  The study from Rush University is also a good reminder of the prevalence of elder abuse, ways that seniors can protect themselves, and options for families and friends to keep loved ones safe from predators.

Ask Kit Kat: Canine Hero

Hook Law Center: Kit Kat, what can you tell us about the dog who became a hero saving his family?

Kit Kat: Well, this is truly a remarkable story. Zero, as the family named him after a ghost dog in Tim Burton’s “The Night Before Christmas,” proved himself to be a loyal and faithful family member. The Martinez family found Zero, a Great Pyrenees, on a Texas highway when he was only a month old. He was in terrible shape, and a veterinarian the family consulted recommended that he be put down. The family resisted, and they’re glad they did—he saved their lives by giving his own. Even before the incident in which he saved their lives, they had begun calling him—Zero the Hero—because of his attentive, calm personality.

Here’s what happened. Zero, by this time, was almost 3 years old. On March 10, 2019 the family was celebrating their daughter’s 12th birthday with an outdoor cookout. There were more than a dozen children at the party. Then, a family friend pulled up in the driveway, and Laura Martinez had an uneasy feeling. Just the day before, she had confronted the young man, Javian Castaneda, about his possibly having broken into her house and having stolen cash and jewelry. An argument ensued, and Castaneda started shoving Laura and hitting her in the face. When one of Laura’s sons joined in the melee, Castaneda pulled out a gun. No one in the family was expecting that at all—Castaneda was one of the son’s friends and had even spent overnights at their house. He fired 9 times. The first shot hit the garage door. Then, Zero was hit, but Zero still managed to lunge at Castaneda. Another shot landed on one of Laura’s son’s foot. One hit Laura in the leg. Another hit Zero’s ear. Zero lunged again. The final shot hit Zero in the stomach. After all this, Castaneda fled the scene. He was arrested a few days later, and he is in jail with a $90,000 bond.

Unfortunately, Zero had to be put down. He was paralyzed, and such a large dog could not live like that. Zero earned his name that day. He truly was a hero. Laura said, “I can honestly tell you there’s no way we would be here without Zero. The reason all our wounds are below the waist is because every time Zero jumped… it kept (Castaneda) from being able to aim.” (Reis Thebault, “A family rescued a dog from certain death. Years later, he died saving their lives in a shooting.” The Washington Post, (Animals section), March 26, 2019)

Posted on Monday, April 22nd, 2019. Filed under Senior Law News.

Filing Status for Years After Spouse’s Death

By Amanda L. Richter, CPA

Taxpayers must use one of five filing statuses when filing their individual tax return. Your filing status determines your income tax rate and the amount of your standard deduction. When selecting a filing status, you may qualify for more than one status. You will want to select the filing status that results in the lowest tax.

In the year of your spouse’s death, you can still file a joint tax return. It is your responsibility to file a final return for your deceased spouse. While you can’t file a joint return for a tax year after the year in which your spouse died, you can continue to use the joint return rates for two more years if you qualify as a “surviving spouse.” The joint return rates are more favorable than the single rates or the head-of-household rates. A surviving spouse also receives a larger standard deduction than a single taxpayer or head of household.

To qualify as a “surviving spouse,” you must meet all of these requirements:

  • You have a child who qualifies as your “dependent” for the tax year.
  • Your spouse died during one of the two years immediately preceding the tax year for which the return is being filed.
  • The child lived with you for the entire year, except for temporary absences.
  • You paid over half the cost of maintaining your home.
  • You were eligible to file a joint return with your deceased spouse for the tax year of the death (even if you didn’t actually file jointly).
  • You have not remarried before the end of the tax year for which the return is being filed.

If you do not meet the requirements for surviving spouse status and you do not have a qualifying dependent, than you will file as Single for the tax years after your spouse’s death.

Adjusting income tax withholding. As a result of your spouse’s death, you may be have to adjust the amount of income tax you have withheld or make quarterly estimated tax payments. To ensure that the correct amount of tax is withheld, you should check your withholding and, if necessary, submit a new Form W-4 with the revised information.

Remarriage. If you remarry, you won’t be able to file as a surviving spouse, but you’ll be able to file a joint return with your new spouse.

Ask Kit Kat: USDA and Cat Experiments

Hook Law Center: Kit Kat, what can you tell us about the USDA and their decision to end experiments using cats?

Kit Kat: Well, in my opinion, this decision was long overdue. The announcement was made on April 3, 2019. “The agency said cats will no longer be used as ‘part of any research protocol in any ARS (Agricultural Research Service) laboratory’ and the remaining cats in its labs are in the process of being adopted by USDA employees.” This is a huge victory for cats! As the White Coat Waste Project, an animal advocacy group, has revealed, cats used in research by the USDA were in some cases injected with parasites to learn of ways to control certain diseases like toxoplasmosis in both felines and humans. Afterwards, they were put to death once the research had been completed.  Though the goal was laudable, the means were not.

There were 14 cats remaining at USDA-ARS labs which had not been infected with parasites, and these will be adopted. It took advocacy by several animal rights organizations as well as by the US Congress to accomplish this result. It’s great to see advocacy that results in permanent change. The saying “You can make a difference,” is certainly true. (Hilary Hanson, “USDA Ends Deadly Cat Experiments, Plans to Adopt Out Remaining Cats,” The Huffington Post, April 2, 2019)

Posted on Tuesday, April 16th, 2019. Filed under Senior Law News.
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